Space 4.0 and the Future of Commercial Spaceflight

Humanity’s past and future are deeply intertwined with exploration. During hard times, the bravest ventures have always pushed the bar of progress a little higher. Consciousness and curiosity have walked hand in hand and the magnetic attraction towards the unknown has guided history and led to those peak achievements of our civilization.

Today’s era is space exploration. The creation of new commercial interests and economic spheres up in space and a renewed rush to interplanetary resources, are just predictable consequences of major technological and social changes set to occur in the next 20-30 years.

Space 2.0: emergence of spacefaring nations engaging in a space race that led to Apollo moon landings

Space 3.0: conception of the International Space Station as symbol of cooperation and exploitation of the circum-terrestrial space

The new Space 4.0 is characterised by the emergence of new interactions and partnerships among governments, private companies, universities, and non-profit organisations, thereby exponentially growing the number of players in the game.

But the most powerful effect of Space 4.0 is the rapid change in balance between institutional players and commercial ventures. In fact, public institutions will tend to become end-customers, leaving most of the power to the private initiative. This trend will also be emphasized by the increased availability of venture capital investment, which recognises the importance of this new economic frontier.

However, Space 4.0 is not the ultimate goal of space exploration, but just the trigger for a broader evolution of commercial spaceflight.

What triggered the interest, as usual, is data. The global economy in the 2015-2025 decade will grow along the three pillars: data gathering, data mining, machine learning and artificial intelligence applications. This will turn data into services, which will ultimately generate revenue. In this context, the circum-terrestrial space and the Low Earth Orbits (LEO) represent the new frontier of data sources.

“A slew of space industry startups – companies like Spire, Planet Labs, Mapbox, BlackSky Global, and Orbital Insight – have attracted venture funds by positioning themselves along a space-based data supply chain, either by building and managing constellations of small Earth-imaging satellites or by managing and crunching the data those satellites collect. Deployed in large enough numbers, these constellations can provide a regularly refreshing bird’s-eye views of the entire planet—data sets from which companies can monitor global economic activity. The play is not because it’s space. The play is not even because it’s imagery. The play is because these satellite systems are going to create large data sets, and those data sets yield insight into corporate policy and industrial activity around the globe—things like corporate supply chains, oil production, or shipping and maritime activity.”

Phase 2: Commoditization of space access

As we have seen, the Phase 1 that culminates with Space 4.0 pushes the private sector to flourish especially in the processing of data products downstream the space-based infrastructures. The peculiar consequence is that this is opening the door to even more players as the barriers to entry the space market will crash down. Today, a space startup can easily position itself by providing a service, an algorithm, or an app, built on top of public (or private) databases provided by satellites constellations.

The emergence of an ecosystem of space-based services creates a bottom-up thrust, which impacts the space hardware and space launch industries as well.

Let’s consider the four big factors influencing the price of launching a payload into orbit:

Technology

Reusability rate

Launch rate

Competition

The increased demand stemming from Phase 1 will act as a catalyst for a dramatic increase in factors 2 and 3. New launcher ventures like SpaceX are already pushing in this direction to cut launch cost. In addition, Space 4.0 will likely overlap with Industry 4.0, bringing continuous advancements and breakthrough in manufacturing, logistics, production strategies, thereby impacting factor 1 as well.

Thus we enter a virtuous circle, since a cost reduction is likely to increase launch rate even further and in turn encourage a greater reusability rate through the creation of better technologies (e.g. 3-D printing, miniaturization, AI, robotics, and virtual reality).

Now, if the need for space constellations is peaking, the demand for cheap launchers will follow suit, thereby boosting the offer as well. And new space launchers can capture segments of the market by offering low cost access to space.

A simple explanation of this mechanism is provided by OneWeb General Manager Scott Sprague (the US-based startup recently raised over $1 billion venture cash to build the 2,000+ satellites LEO constellation), commenting on a fresh agreement with Blue Origin:

“It is something that came up as a supplement to what we have in place with Arianespace with Soyuz and with Virgin Galactic,” he said. “The core of the network will be launched on Soyuz rockets, but we needed some alternatives and we want to keep driving the industry to provide more choices on the launch side with more cost-effective solutions. I think it’s important for all of us to have these, so we are excited about where Blue Origin is headed.”

It is reasonable to believe that those technology players so active in Phase 1 will try to achieve a vertical integration and invest to gain direct access to the data sources they use for their services (remember they are literally sitting on piles of cash). We are already seeing today some bold moves from Google (see the $1 billion investment in Elon Musk’s SpaceX, and the rumoured involvement in the OneWeb Constellation project), Amazon (see the Blue Origin space startup funded and controlled by Jeff Bezos), or Microsoft (see the SpaceShipOne and Stratolaunch Systems ventures launched by Paul Allen).

The steady increase in the number of competitors will ultimately sustain factor 4, just like airlines today engage in price wars for civil passengers market.

It is clear that all the four factors determining the launch price are pointing towards the same direction: the commoditization of space access.

However, Phase 2 will probably cause an escalation of the so called Kessler Syndrome linked to the exponential risk of collision among objects flying in LEO. This phase will likely end with a rapid adaptation of international policies and regulations, creating heavy limitations to any further commercial development of circum-terrestrial space.

Phase 3: Business from outer space

Once humanity will have occupied all the available circum-terrestrial space, the only available alternative for new commercial ventures is to look beyond. The commoditization of space access occurring in Phase 2 will be the preliminary condition to create the case for business in Phase 3.

Thus, the emergence of new commercial ventures creating economic profit from outer space will be triggered by 2 major events:

The cost of assembling space platforms, interplanetary spacecrafts, and permanent outposts in space will drastically reduce as a result of Phase 2

Earth orbits will be heavily regulated and won’t allow for further development or expansion of orbital infrastructures

In this context, the new commercial ventures will push the economic frontier towards exploiting interplanetary resources on celestial bodies and asteroids, and developing temporary or permanent space colonies on the Moon and Mars (populated either by humans or androids). This Phase 3 will shake the balance of economic interests, shifting the focus from an Earth-based economy towards a Space-based economy.

But at this stage, it is very difficult to imagine how and when exactly this is going to happen. The only certain fact is that it is going to happen.

The future: human curiosity and space entrepreneurship

The three Phases described earlier will undoubtedly overlap as the evolution of technology and human initiative are never linear and rarely comply with expectations and forecasts. Several discoveries and political/economic conditions might suddenly slow down or speed up some aspects of the human spaceflight adventure.

However, the trajectory outlined here has some key elements, which need to be nurtured and defended at any cost: human curiosity and ambition. Space entrepreneurship is still niche in today’s startup landscape, but will ultimately drive our progress in space in the years to come.

I think this is an exciting time for space: many opportunities are flourishing and it’s up to entrepreneurs and investors to realize there’s a new gold rush up there in the skies.

“We set sail on this new sea because there is new knowledge to be gained, and new rights to be won, and they must be won and used for the progress of all people. We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard; because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one we intend to win”.

J.F.K

About the author

Ciro Borriello holds an aerospace engineering MSc at the Politecnico of Torino and an MBA at the University of Cambridge. Previously R&D and Innovation Project Manager at Airbus, now Space Programme Management officer and Risk Manager at EUMETSAT, futurist author and space entrepreneur.

16 Replies to “Space 4.0 and the Future of Commercial Spaceflight”

Good insights on Space 4.0 and the rebalancing of the interests addressing space. What I didn’t see was the explanation of the new role for state actors. Think of science missions that will explore the moons of Saturn and Jupiter, Uranus and Neptune, the Kuiper Belt and Oort Cloud. And the role the larger global scientific community may collectively play to mount an interstellar voyage to the Alpha Centauri-Proxima Centauri system as envisioned by Stephen Hawking. Will the latter be the beginning of Space 5.0 with the invention of new propulsion technologies that will move us closer to light speed?

That’s a good point Len. However, consider that already today the commercial portion of space activity (by revenue) accounts for more than 75% of the pie.
Just to give you a few numbers, in 2015 the global space industry market size was around $323 billion, while NASA budget in 2015 was $18 billion (5.6%), of which only $13 billion dedicated to Space Science & Exploration (4%).
And as the new commercial ventures (mainly service providers) become more reliable and efficient, the gap can only increase. Especially if you consider that institutional players are even committing a portion of their budget to buy services from private companies (see NASA contracts to SpaceX as an example). I am not saying that community won’t benefit from the incredible advances and discoveries coming from institutional science and exploration missions, but their budget will be almost negligible when compared to the emergent space-based economy. To draw a historical comparison, think of the exploration of Americas and Asia during the XV and XVI centuries and look at the transition of the economic power from the European kingdoms to the rising international trade companies.

It is true that the majority of new launch contracts are now in the hands of SpaceX. But from my perspective, the changing economic conditions when European state actors chartered companies to carry on with the exploitation of the discovery is not analogous to the current conditions of space enterprise. In the former case the European states created chartered companies that were almost equal to state actors. Take for instance the Hudson Bay Company or the East India Company. You cannot compare these to Blue Origin, SpaceX, ULA or any other commercial space operators today.

Admittedly, I’ve followed our efforts in space more from the sidelines and via headlines. This was a fascinating read and super interesting to hear more of the backstory of where we’ve come and (hopefully) where we’re headed in the future!

It’s crazy to think what our lives and culture are going to be like just 10-15 years down the road let alone think about in 50 years. I think the commercialization of space is close upon us and it’s hard to wrap my mind around.